Rail authority must let small businesses compete

Federal officials scolded the California High-Speed Rail Authority over its lackluster efforts to involve minority-owned and other small businesses in contracts to build a high-speed train system.

The Federal Railroad Administration's Office of Civil Rights stopped short of declaring that the authority discriminated against minority businesses. But the agency ordered state officials to take immediate steps to improve the chances for disadvantaged businesses to compete for some of the billions of dollars that the federal government has given the state to build the initial stages of the project in the San Joaquin Valley.

Thursday's order was a response to a complaint filed in December by the Associated Professionals and Contractors, or APAC, an Oakland-based nonprofit advocacy group. The complaint accused the state rail authority of systematically excluding minority-owned businesses from bidding for work on the statewide $43 billion project.

Federal officials said their investigation of the complaints could not establish that the rail authority violated federal civil rights laws that prohibit discrimination based on race, color or national origin. But the authority "unquestionably has had little commitment to collecting accurate statistics on the amount of contract dollars it awards to women-owned and minority-owned businesses," Calvin Gibson, the FRA's civil-rights director, said in Thursday's decision.

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The authority's lack of a policy to actively promote opportunities for small and disadvantaged businesses "could potentially result in a violation in the future," Gibson added.

About $3 billion in federal grants for the initial construction include requirements that the state rail authority agrees to provide "maximum practicable opportunities" for small businesses and veteran-owned businesses, and to ensure "that all individuals – regardless of race, gender, age, disability, and national origin – benefit" from the project.

The decision orders the rail authority to take a number of steps within the next 60 days to comply with its obligations to receive federal money. Those include organizing a program to help small and minority-owned firms compete for contracts; naming an officer who will be responsible for the program; developing a disadvantaged-business program; establishing a directory that identifies all qualifying small or disadvantaged businesses eligible to bid; creating a Business Advisory Council to bring small-business issues to the rail authority's board of directors; and creating a comprehensive plan for compliance with federal grant agreements.

"This is a great victory for minority-owned businesses who want the opportunity to compete for contracting opportunities, particularly on an enormous public works project such as this one," said Oren Sellstrom, an attorney for the Lawyers' Committee for Civil Rights, a San Francisco organization that lodged the complaint on behalf of APAC.

But APAC president Diana LaCome said she's waiting to see how the rail authority responds to the federal decision, which comes one week after an industry forum in Fresno in which state officials urged would-be prime contractors and small businesses in the Valley to team up to bid on the first construction projects in the region.

"At least we're seeing some movement and outreach to small businesses, and we're getting a lot of lip service from the authority," LaCome said. "But we'll see. The FRA has given them 60 days to move concretely in that direction."

A spokeswoman for the rail authority said the agency already is making strides to improve its performance when it comes to recruiting and encouraging diversity in its contracting.

"That complaint was issued nearly a year ago, and since that time we've developed an aggressive small-business engagement plan," spokeswoman Rachel Wall said. "And we will ensure the program is strengthened moving forward.

"It is imperative that we work with our business community to provide opportunities for business at all levels. The project will be stronger for the effort."